Brexit: Between a rock and a hard place

The average divorce is expensive in both cash and emotional terms. Neither side wants to show any sign of weakness or compromise. The first few days of the post-Article 50 suggest that Brexit will follow the pattern.
The first impasse is over who pays. The EU says the Brexit bill must be settled before any talks can begin on a new trade agreement. The European Parliament’s resolution contends that Britain should not be given a free-trade deal by the EU in the next two years, while any transitional arrangement to cushion the UK’s exit after 2019 could last no longer than three years.

For their part, hard Brexiteers have been cheered by a House of Lords committee report in March, which argued that the UK would not be «legally obliged» to pay a penny to cover any post-2019 liabilities.
Until Article 50 talks formally begin everything and nothing is on the table, which partly explains this week’s pointless furore over the potential status of Gibraltar.

The reference to Gibraltar in EU draft negotiating guidelines was apparently added at the 11th hour after the Spanish government noticed that the status of the Rock had not been mentioned in Theresa May’s Article 50 letter.

Michael Howard, a former Conservative Party leader, compared the potential dispute over Gibraltar with the 1982 Falklands War.

“I can see no harm in reminding them what kind of people we are,” Howard told Channel 4 news.

The chances of the British navy sending a few gun boats to fight a 21st century Armada are, fortunately, rather slim, although no kind of neo-colonial revivalism can be completely ruled out from a government in which Boris Johnson is foreign minister.

Even so, this kind of talk is going to be a constant frustration to serious people for the next two years.

Provocation from hard-core Brexiteers doesn’t help May’s ministers in their bid to make allies. ‘Gibraltar-gate’ has already derailed a visit to Spain by Brexit minister David Davis.

No accident
But let’s not make the mistake of thinking that Howard’s rhetoric was an accident.

He is part of the group of eurosceptics who wanted the UK to fall back on a World Trade Organisation (WTO) arrangement with the EU. Inflammatory rhetoric which provokes one country or more in the EU-27, reduces the chances of an amicable divorce and makes it more likely that EU leaders will mothball any talks on a successor trade agreement.

Having spent a generation blaming «eurocrats» for the ills of the world, the Conservative right wants to be able to pin the blame for a «punishment» Brexit on its old foe.

A majority of Conservative MPs would be quite comfortable with talks collapsing, and are already preparing the media ground for trade on WTO terms. Five Tory MPs on the cross-party Brexit committee in the UK Parliament disowned its latest report which demanded that the government provide some economic evidence to back up its assertion that «no deal is better than a bad deal».

Faced with this, EU politicians must decide if they are going to rise above the bravado or respond in kind.

Manfred Weber, the EPP group leader in the European Parliament, appears to have chosen the latter, issuing dark threats of the UK financial services sector losing its status as a euro-clearing house.

“From now on we will have the interests of the EU27 in mind and not anymore of the British side,” said Weber in Strasbourg this week. “Leaving the EU … means to be alone.”

The problem when negotiations descend into a shouting match is that the voices of moderation get drowned out. If that happens, Brexit will be expensive.

At their distinctly low-key meeting in Downing Street on Thursday, May and European Council president Donald Tusk agreed to «lower tensions» – a welcome return to sanity.

No winners
Frustrating as Brexit Britain is to the rest of Europe, European Commission president Jean-Claude Juncker was correct in his assessment on Wednesday that “no deal would be the worst-case scenario. There would be no winners.”

When you sweep aside the hyperbole, UK ministers and civil servants are correct when they insist that there is an obvious trade and political agreement to be struck with the EU.

The EU relies on access to London’s financial services, just as the UK cannot really afford to fall back on import and export tariffs with its largest trading partner.

Obtaining this will require political will and compromise on both sides – but would be mutually beneficial.

A messy and expensive divorce because of pig-headed nationalism on both sides of the Channel would stymie the interests of millions. As Juncker put it, “everybody will lose.”